Poll victory gives govt free rein

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Prime Minister John Howard will have free rein to sell Telstra and scrap unfair dismissal laws from next July following a stunning election result which will let him put his conservative stamp on Australia.

The coalition picked up seats in the House of Representatives and is poised to control the Senate with the support of the fledgling religious right party Family First.

With seven lower house seats still to be decided, Labor has lost between six and eight seats, potentially leaving the coalition with a 26-seat majority - although it has also lost some seats to Labor.

And the collapse of the Australian Democrats vote will make Mr Howard the first prime minister to win control of the Senate since Malcolm Fraser in 1975.

The coalition is tipped to end up with 38 of the 76 Senate seats, with Labor holding 28, the Australian Greens five, the Democrats four and Family First holding the final seat.

That will let the government block any Labor or minor party initiatives in the Senate, including potentially damaging inquiries into issues such as children overboard and the pre-Iraq war intelligence.

Mr Howard will outline his fourth term agenda at a press conference in Sydney, with the full sale of Telstra and scrapping unfair dismissal laws likely to be on the agenda.

Australian Greens leader Bob Brown said Australia would be a nastier country with the government in control of the Senate.

"But I did predict it. Australians voted for it," Senator Brown said.

"They will now see Telstra sold, the majority, we will see our indigenous people left off the agenda, we are going to see nastier legislation on civil liberties ... and that nastiness, that Hansonite attitude towards people who are `other' will express itself over the coming three years."

Opposition Leader Mark Latham spent the day cloistered in his family home in western Sydney as Labor started its post mortem on what went wrong.

Mr Latham will hold a press conference but is expected to stay on as leader, a job he started only 10 months ago.

In contrast, Mr Howard started the first day of his fourth term with his usual morning walk before going to church, no doubt to give thanks for his victory.

In between, he took congratulatory phone calls from US President George W Bush, who faces the polls himself in three weeks, and British Prime Minister Tony Blair.

"They both rang me to congratulate me and I had a brief discussion with each," Mr Howard said.

Mr Howard, 65, is now guaranteed a decade in power, unless he retires early, and will become the nation's second-longest serving prime minister behind Liberal Party founder Sir Robert Menzies in December.

He has refused to commit himself to serving a full three years, fuelling speculation that he will step aside for Treasurer Peter Costello midway through this term.

But Mr Costello was not discussing his leadership ambitions.

"He's just won a fourth election. That's second only to Menzies. He's equalled Bob Hawke so you've got to give great credit to John Howard," Mr Costello said.

The 41st Australian parliament will sit in mid-November, with Mr Howard already promising to introduce draft laws to cut small business tax and free up the industrial relations system by the end of the year.

He has already outlined the first seven things he would do if re-elected, putting his plan for a network of technical colleges to train apprentices at the top of his list.

Democrats leader Andrew Bartlett said he wanted to stay on as party head despite the disastrous showing, in which all three Democrats senators up for election were turfed out.